Chicago software developer gets 3 months for lying to obtain $200K in grants

A software developer was sentenced Wednesday to three months in prison after he lied to obtain $200,000 in grant money from NASA and the National Space Foundation.

Miroslav Velev, 50, of Chicago, pleaded guilty last year to a misdemeanor count of conversion of government funds, according to the U.S. Attorney’s Office for the Northern District of Illinois.

Velev, a mathematician with an advanced degree in electrical and computer engineering, ran a software development and consulting firm called Aries Design Automation LLC. The Chicago-based company developed ways to solve electronic design automation issues, prosecutors said.

Velev falsely represented his company’s finances to get the money through the Small Business Innovation Research program, which gives small businesses opportunities to participate in federally-sponsored research and development, prosecutors said. The program required companies that applied “to show independent, third-party investments or commitments of investment in their projects.”

“Absent Velev’s fraud and false statements, his proposals would not have been approved and he would not have been awarded federal funds,” Assistant U.S. Attorney William R. Hogan, Jr., argued in the government’s sentencing memorandum. “By intentionally deceiving the government, Velev personally benefited at the expense of another eligible small business, and at the expense of the taxpayers who funded the SBIR program.”

When Velev pleaded guilty, he admitted to lying about receiving that required investment and submitting a screenshot of his firm’s bank account that appeared to show that the necessary cash had been transferred from an outside investor. But there was no investor, and Velev had actually sent his own money to the account to make it look like he’d received an investment.

Velev’s grant proposals also included an “investment letter” that identified a chief financial officer for the phony investor. That alleged executive was actually an acquaintance of Velev’s wife and “had no connection with an investment in Aries.”

Velev was sentenced to three months in federal prison on Wednesday, prosecutors said. He previously had to pay restitution of $150,000 to NASA and $50,000 to the National Space Foundation.